US Airways and American Airlines can proceed with merger

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US Airways and American Airlines reached a deal with the government that will allow them to form the world's largest airline.

It doesn't guarantee that some of the airlines' local employees will keep their jobs, however.

The airlines agreed on Tuesday to relinquish some major airport takeoff and landing rights to other carriers as part of a deal to allay concerns that less competition would lead to higher fares. The settlement — if a federal judge approves — would end a fight with the Justice Department and head off a courtroom battle this month. The airline would be called American Airlines.

“We have made and will continue to make the case that our employees and facilities here in Pittsburgh are second to none and that there is much to be gained by the airlines if they keep these facilities operating,” said Dennis Davin, an Allegheny County Airport Authority board member who heads the county's economic development department.

US Airways employs about 1,800 in Pittsburgh, down from more than 12,000 when the airline operated its busiest hub here.

Most of the local employees who could be affected work at two facilities. A $32 million flight operations center in Moon that opened in 2008 with the help of $4 million in state grants and tax credits employs about 600. About 700 people work at the airport's heavy maintenance base, which overhauls jets from across US Airways' system.

US Airways CEO Doug Parker said in March that the local flight operations center, which coordinates the airline's 3,100 daily flights, would likely close in a merger. An existing, larger one in Dallas, where the combined carrier would be based, would replace it.

“We don't have anything new to report,” Parker said when asked about the Moon center during a conference call, noting airlines typically put flight centers where their corporate headquarters are. US Airways' Moon center is an exception.

Allegheny County Executive Rich Fitzgerald and Brad Penrod, president of the county's airport authority, said the deal guarantees the number of flights the new American offers at Pittsburgh International Airport will remain at least at the existing level for five years. The airlines offer a combined 56 daily flights to 13 destinations.

“That is a big win for our region,” Fitzgerald said.

Parker didn't provide a timetable for changes. Airline officials said they hoped to close on the proposed merger by the first half of next month.

Dan Persuit, president of the Transport Workers Union Local 545, which represents more than 160 workers at the flight operations center, did not return calls.

“We go to sleep at night knowing that they can't just willy-nilly decide tomorrow to close the heavy maintenance base, but we do have concerns about the flight operations center,” said Bill Hollowood, president of the International Association of Machinists Local 1976, which represents about 700 workers at the maintenance base and 100 at the flight operations center.

Hollowood said heavy mechanics have provisions in their contract that could keep employment numbers about the same after a merger. The contract mandates that a combined 675 heavy mechanics must be maintained in Pittsburgh and Charlotte, along with support workers.

A new contract is being negotiated to replace one that expired in January 2012, but Hollowood said airline management “assured us the protections would remain.”

Hollowood said the airline hasn't told him when the Moon operations center might be mothballed.

The Justice Department and six state attorneys general, including Pennsylvania's Kathleen Kane, filed a lawsuit in August regarding their antitrust concerns.

In a letter to employees on Tuesday, Parker and American Chairman, President and CEO Tom Horton said the settlement, if approved, clears the way for the $11 billion merger to be completed next month.

“We are pleased to have this lawsuit behind us and look forward to building the new American Airlines together,” Parker said.

During the past five years, the airline industry endured the combinations of Delta with Northwest, United with Continental and Southwest Airlines Co. with AirTran. The price of a domestic round-trip flight climbed more than 15 percent since 2009, when adjusted for inflation, according to the Bureau of Transportation Statistics.

U.S. Attorney General Eric Holder said the settlement “ensures passengers will see more competition on nonstop and connecting routes throughout the country.”

The airlines said the new American would operate 44 fewer daily flights at Washington's Reagan National Airport and 12 fewer daily flights at New York's LaGuardia Airport. Those two airports, along with Newark and New York's John F. Kennedy International, are “slot-controlled,” meaning the federal government regulates the number of takeoffs and landings.

The airlines also promised to maintain seven existing hubs, including one in Philadelphia, for at least three years.

The Associated Press contributed to this report. Tom Fontaine is a staff writer for Trib Total Media. He can be reached at 412-320-7847 or tfontaine@tribweb.com.

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